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Insurer Pearl offers better bonds deal

David Hellier
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PEARL, the life insurance group that is planning a stock market flotation sometime next year, has resurrected discussions with the disgruntled holders of &pound;500m of its bonds.<br /><br />Earlier this year, Pearl, then led by serial entrepreneur Hugh Osmond, suspended interest payments on the bonds, sparking protests from the holders, including representatives from Rathbone, F&amp;C, Axa and Fidelity. Pearl has since been refinanced, with Osmond losing much of his influence at the group.<br /><br />At a recent meeting between the company and a bondholder grouping, the management proposed a possible buyout of the bonds at between 40-65p in the pound &ndash; much higher than the 12.5p first offered by the company.<br /><br />Pearl is now chaired by Ron Sandler, the chair of Northern Rock and a City veteran who is hoping to lead the group&rsquo;s flotation.<br />Several proposals were aired, including the possibility of some bondholders exchanging the bonds they own for new instruments. <br /><br />As a consequence of this, some bondholders have asked if they can carry out due diligence on the insurance company.<br /><br />One bondholder told City A.M: &ldquo;I think we may have the green shoots of progress but it is the substance of what comes next that counts.<br /><br />&ldquo;I think we may just have got recognition that you can not ride roughshod over such an important asset class if you are aiming to be a respectable company. This issue is just not going to go away.&rdquo;<br /><br />The bondholders have pointed out to Pearl that when it tries a stock market flotation next year it will be appealing to an investor class not dissimilar to the institutions that hold the bonds at the centre of the dispute.<br /><br />Pearl, which declined to comment, is being advised by UBS and Clifford Chance on the issue.